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from Ian Bremmer:

In pursuit of American humility

This week, as Washington navel-gazed its way into a shutdown, its actions didn’t go unnoticed abroad. In Turkey, Recep Tayyip Erdogan, the Prime Minister of Turkey, took the opportunity to gloat about the U.S.’s refusal to pay its federal workers, many of whom are on furlough because of the shutdown. “We are now witnessing the crisis in the U.S. We have never been a government that could not pay its personnel,” Erdogan said.

This is how America’s dysfunction at home is undermining its credibility abroad. The latest development: Obama’s desire to maintain laser focus on the Republicans for political gain has prompted him to cancel a pivotal trip to Asia to attend an Asia-Pacific Economic Cooperation meeting. But it’s not just the shutdown: it is a series of issues over the past decade, chief among them the financial crisis. For decades the U.S. had been espousing the virtues of free market capitalism, urging other countries to adopt the model. America’s exceptional economic success, the thinking went, allowed it to give advice about how other countries should build their own economies.

And then the bottom fell out. The crisis, spurred by lax regulations that were manipulated by the big banks, started in the United States, before its impact spread globally. An unemployment and debt crisis soon followed. So did a rush to rethink the way countries handle their economies. With the free-market system no longer sacrosanct, countries with other approaches were happy to second-guess the system. China’s state capitalist model became a viable alternative as it navigated the financial crisis much better than most. I’ll never forget my meeting with Chinese Vice Foreign Minister He Yafei in 2009, when he asked me outright, “Now that the free market has failed, what do you think is the proper role for the state in the economy?” The financial crisis was an opportunity to reopen the debate surrounding perceived global values -- and to kick the U.S. system while it was down.

That’s a case study that points to America’s larger problem. All too often, America has been leading by rhetoric rather than example. In a G-Zero world -- what President Obama described as a “vacuum of leadership” in his U.N. General Assembly speech -- strong words do not qualify as leadership. It’s only credible when you call for reforms or actions that you actually stand behind -- and reflect them in your domestic policy.

from The Great Debate:

Why this shutdown isn’t like 1995

The political battlefield of the current government shutdown looks a lot like the last big shutdown of 1995. But major changes within the Republican Party in Congress -- a weaker leadership, the demise of moderates and two decades of gerrymandering -- could make this year’s endgame far harder.

Then as now, a rebellious Republican Congress used a budget bill to set up a deliberate confrontation with a Democratic president over spending priorities. GOP militants and radicals in the House – today’s wing nuts -- bet that gridlock, disarray and the embarrassment of a shutdown would force the White House to give in.

from The Great Debate:

Forging ahead with free trade

The recent focus on what divides world leaders, from Syria to the euro zone, has obscured the significant agreements reached at the Group of 20 meeting in St. Petersburg earlier this month. One of the most important was support for free trade and opposition to protectionism.

We can now build on this momentum, as well as other trade liberalization efforts, to achieve meaningful progress at the World Trade Organization ministerial meeting in Bali in December.

from David Rohde:

The key stumbling blocks U.S. and Iran face

A historic phone call Friday between the presidents of the United States and Iran could mark the end of 34 years of enmity.

Or it could be another missed opportunity.

In the weeks ahead, clear signs will emerge whether a diplomatic breakthrough is possible. Here are several key areas that could determine success or failure:

from The Great Debate:

Ted Cruz: Blackmailer

On October 28, Senator Ted Cruz (R-Tex.) and his supporters may wish to commemorate the feast day of Saint Jude. Jude is the patron saint of hopeless causes. Because if ever there was a hopeless cause, it is killing the Affordable Care Act.

Fighting for hopeless causes is not uncommon in politics. Think of the nearly two centuries it took to abolish slavery and segregation in the United States. Fighting for a hopeless cause can raise public consciousness about an issue and advance the career of the advocate.

from The Great Debate:

For U.S.-Iran, it’s all in the timing

Four years after President Barack Obama famously extended his hand of friendship to Iran, Tehran finally seems willing to unclench its fist. The most decisive geopolitical handshake of this decade may take place today at the United Nations.

Iran's new president Hassan Rouhani and Obama may have this encounter at the luncheon of U.N. Secretary General Ban Ki-moon Tuesday or in the U.N building’s corridors.

from The Great Debate:

On U.S.-Iran deal, devil is in the details

The feel-good mood engendered by promising overtures from Iran’s new president Hassan Rouhani and President Barack Obama has raised hopes for a settlement in the Iranian nuclear crisis. But the devil -- especially in this case -- is in the details.

The nuts-and-bolts of Iran's nuclear program, and whether Tehran can give guarantees that it is not designed to make nuclear weapons will determine whether a deal with the United States is possible.

from David Rohde:

Iran’s offer is genuine — and fleeting

President Barack Obama’s speech to the United Nations General Assembly in New York on Tuesday is not expected to generate much excitement. Battered by his uneven handling of Syria, no bold foreign policy initiatives are likely.

Instead, the undisputed diplomatic rock star of the gathering will be Iran’s new President Hassan Rouhani. In his first six weeks in office, the cleric has carried out one of the most aggressive charm offensives in the 34-year history of the Islamic Republic. And the Obama administration responded Thursday, saying the president would be open to having a meeting in New York.

from Breakingviews:

Activist would contest Obama’s capital allocation

By Daniel Indiviglio
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

If Barack Obama were the chief executive officer of the United States, an activist investor would have a field day contesting his allocation of capital – political capital, that is. In the CEO analogy, an uppity shareholder would want more focus on the economy, jobs and fiscal challenges.

from The Great Debate:

Yellen: An economic tonic for the sluggish recovery

The money markets rejoiced when Larry Summers pulled out of the race to be Federal Reserve chairman. The reason was simple, self-serving and not necessarily wholesome: A different chairwoman -- most likely Janet Yellen -- would be more inclined to continue the Fed’s program of large-scale bond purchases and low interest rates.

Stock and bond markets, of course, love low interest rates. Cheap rates on bonds push stock values up as investors seek higher returns. Interest rates and bond prices move inversely -- so cheap money keeps bond prices high. And low interest rates are good for mortgage demand and housing prices.

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